AMENDMENT NO. 2 AND WAIVER
AMENDMENT NO. 2 AND WAIVER (this "Amendment"), dated as of
April 14, 2000, between ThermoView Industries Inc. ("Company") and GE Capital
Equity Investments, Inc. ("GE Capital").
W I T N E S S E T H:
WHEREAS, Company and GE Capital are parties to that certain
Securities Purchase Agreement, dated as of July 8, 1999 (as from time to time
amended, restated, supplemented or otherwise modified, the "Purchase Agreement",
and unless the context otherwise requires or unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned to them in the
Purchase Agreement); and
WHEREAS, Company issued Warrant No. 4 dated July 8, 1999 to GE
Capital (the "Warrant"); and
WHEREAS, Company has requested an amendment and/or waiver of,
and GE Capital has agreed to amend and/or waive, certain provisions of the
Purchase Agreement and the Warrant, on the terms and subject to the conditions
as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE PURCHASE AGREEMENT. Effective as
of the Effective Date (as defined herein), the Purchase Agreement is amended as
follows:
1.1 By amending and restating the definition of "Qualified
IPO" in its entirety as follows:
`"Qualified IPO." shall mean a sale of Common Stock pursuant
to an initial public offering of Common Stock on Form S-1 (or any
equivalent general registration form) under the Securities Act (i) at a
price not less than $5.50 per share of Common Stock, (ii) in which the
aggregate proceeds (before expenses and underwriting discounts) to
Company shall not be less than $6,902,500 and (iii) following which the
Common Stock will be listed on the American Stock Exchange.'
1.2 By amending and restating Sections 5.1(b)(i) and (ii)
of the Purchase Agreement in their entirety as follows:
`"(i) MONTHLY INFORMATION. Commencing with the month ending
March 31, 2000, Company will deliver to Purchaser as soon as
practicable after the end of each month, but in any event within 30
days thereafter: (A) an unaudited
consolidated balance sheet of Company and its Subsidiaries, if any, at
the end of such month; (B) unaudited consolidated statements of income,
retained earnings and cash flows of Company and its Subsidiaries, if
any, for such month and for the portion of such year ending with such
month; (C) an acquisition pipeline report; (D) projected consolidated
cash flow statements of each of Company and its Subsidiaries, including
summary details of cash disbursements, for the immediately succeeding
calendar month; (E) an Earn-Out forecast which shall detail all
anticipated payments for all Earn-Outs; and (F) a certificate
("Compliance Certificate") signed by the Chief Executive Officer or
Chief Financial Officer of Company, certifying that such officer has
reviewed the relevant terms of this Agreement and the other Transaction
Documents, has made, or caused to be made under his or her supervision,
an adequate review of the transactions and condition of each of Company
and its Subsidiaries during such period and as at the date of such
signing, and that such review has not disclosed the existence, during
such period or as at the date of such signing, of any Event of Default,
or if so, specifying the nature and period of existence thereof and
what action Company or any of its Subsidiaries has taken or is taking
or proposes to take with respect thereto together with a certification
that, as applicable, Company and its Subsidiaries as at the end of such
month, if applicable, was, or was not, in compliance with the financial
covenants set forth in Section 5.1(h) of this Agreement, and a schedule
disclosing the calculations forming the basis for such certification.
(ii) QUARTERLY INFORMATION. Company will deliver to Purchaser
as soon as practicable after the end of each of the first three
quarterly fiscal periods in each Fiscal Year of Company, but in any
event within 45 days thereafter, (A) an unaudited consolidated balance
sheet of Company and its Subsidiaries, if any, as at the end of such
quarter; (B) unaudited consolidated statements of income, retained
earnings and cash flows of Company and its Subsidiaries, if any, for
such quarter and (in the case of the second and third quarters) for the
portion of the Fiscal Year ending with such quarter, setting forth in
comparative form in each case the projected consolidated figures for
such period and the actual consolidated figures for the comparable
period of the prior Fiscal Year. Such statements shall be (1) prepared
in accordance with GAAP consistently applied, (2) in reasonable detail,
(3) certified by the principal financial or accounting officer of
Company and (4) accompanied by a Compliance Certificate or other
statement in reasonable detail, certified by the Chief Executive
Officer or Chief Financial Officer of Company showing the calculations
used in determining compliance with each of the financial covenants set
forth in Sections 5.1(h) and 5.2(i); and (C) the pro forma financial
reports of Company and its Subsidiaries for such quarter."
1.3 By amending and restating Sections 5.1(h)(i) and (ii)
in their entirety as follows:
"(i) FUNDED DEBT TO MODIFIED EBITDA. The ratio, calculated as
of the end of each fiscal quarter of Company and its Subsidiaries
beginning March 31,
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2000 (each a "Calculation Date"), of the consolidated (and combined, if
applicable) Funded Debt of Company and its Subsidiaries as of each
Calculation Date divided by the consolidated (and combined, if
applicable) Modified EBITDA for Company and its Subsidiaries for the
four (4) fiscal quarters of Company and its Subsidiaries immediately
preceding the applicable Calculation Date shall not be greater than
10.00 to 1.00 as of the Calculation Date occurring on March 31, 2000,
and thereafter until, but not including, the Calculation Date occurring
on June 30, 2000; 7.50 to 1.00 as of the Calculation Date occurring on
June 30, 2000, and thereafter until, but not including, the Calculation
Date occurring on September 30, 2000; 5.25 to 1.00 as of the
Calculation Date occurring on September 30, 2000, and thereafter until,
but not including, the Calculation Date occurring on December 31, 2000,
and 4.25 to 1.00 as of the Calculation Date occurring on December 31,
2000, and as of all Calculation Dates thereafter.
For purposes of this financial covenant, the following terms
shall have the following meaning:
(A) "Base Earnings" shall mean the consolidated (and
combined, if applicable) sum of all earnings before
interest, taxes, depreciation and amortization LESS
any extraordinary gain, PLUS expenses, calculated and
estimated by Company and its Subsidiaries in a manner
and amount acceptable to Purchaser in each case,
incurred by Company and its Subsidiaries, if and to
the extent applicable, that reasonably are expected
no longer to be incurred because of operating
efficiencies realized as a result of and following
each such entity having become a Subsidiary of
Company ("Non-Recurring Expenses"), and before giving
effect to "corporate income" (e.g., interest income
and similar revenues generated by cash on hand) of
Company and its Subsidiaries and corporate overhead
incurred by Company and its subsidiaries during the
period of calculation.
(B) "EBITDA" shall mean the sum of (i) Base Earnings of
Company and its Subsidiaries PLUS (ii) an amount
equal to all non-cash charges to income incurred by
Company and its Subsidiaries on or before the date of
this Agreement in respect of stock options heretofore
issued by Company and its Subsidiaries ("Stock Option
Charges"), not to exceed (a) $6,120,000 for the
Calculation Date occurring on September 30, 1999,
until (but not including) the Calculation Date
occurring on December 31, 1999, (b) $620,000 for the
Calculation Date occurring on December 31, 1999,
until (but not including) the Calculation Date
occurring on March 31, 2000 and (c) $0.00 for all
Calculation Dates occurring on and after March 31,
2000.
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(C) "Funded Debt" shall mean the consolidated (and
combined, if applicable) sum of borrowings pursuant
to the PNC Loan Agreement, plus current (i.e. less
than or equal to one (1) year) and non-current
maturities of long term Indebtedness of each of
Company and its Subsidiaries (including but not
limited to any obligations of any of Company or its
Subsidiaries that are determined based on the future
performance of any acquired entity ("Earn-Outs") to
any other person or entity). For purposes of this
calculation, Funded Debt shall be deemed to include,
at all times, the actual principal amount of any
Senior Debt and Indebtedness under this Agreement and
the Note, in each case due and owing without regard
to any carrying value thereof shown on the books and
records of Company and its Subsidiaries.
(D) "ModifiedEBITDA" is defined as the EBITDA of Company
and its Subsidiaries for which the Funded Debt to
Modified EBITDA financial covenant is being
calculated, except without giving effect to the
EBITDA of any of Company or its Subsidiaries (each an
"Unaudited Subsidiary") for which the Purchaser has
not received both (x) audited financial statements in
form and detail acceptable to the Purchaser, as well
as (y) other due diligence information concerning
such of Company or its Subsidiaries as Purchaser may
request, in form and substance acceptable to the
Purchaser plus fifty percent (50%) of the EBITDA of
each Unaudited Subsidiary.
(ii) FIXED CHARGE COVERAGE RATIO. The ratio as of each
Calculation Date of the consolidated (and combined, if applicable)
Modified EBITDA LESS the amount of any Earn-Outs (as that term is
defined herein) not financed with the proceeds of loans or other
borrowings from any person or entity ("Unfinanced Earn-Outs"), cash
taxes ("Cash Taxes") and Capital Expenditures of Company and its
Subsidiaries not financed with the proceeds of loans or other
borrowings from any person or entity ("Unfinanced Capital
Expenditures"), which Unfinanced Earn-Outs, Cash Taxes and Unfinanced
Capital Expenditures were incurred during the immediately preceding
four (4) fiscal quarters of Company and its Subsidiaries divided by the
sum of consolidated (and combined, if applicable) current maturities of
Funded Debt for Company and its Subsidiaries PLUS any and all dividends
paid or accrued by Company and its Subsidiaries PLUS all Fixed Charges
paid or accrued by Company and its Subsidiaries, shall not be less than
.70 to 1.00 as of the Calculation Date occurring on March 31, 2000, and
thereafter until, but not including, the Calculation Date occurring on
June 30, 2000; and .75 to 1.00 as of the Calculation Date occurring on
June 30, 2000, and thereafter until, but not including, the Calculation
Date occurring on
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September 30, 2000; and 1.10 to 1.00 as of the Calculation Date
occurring on September 30, 2000, and thereafter until, but not
including, the Calculation Date occurring on December 31, 2000; and
1.20 to 1.00 as of the Calculation Date occurring on December 31, 2000,
and as of all Calculation Dates thereafter."
1.4 By adding the following new clause (iv) to Section
5.1(h):
"(iv) SENIOR DEBT TO EBITDA. The ratio as of each Calculation
Date of the sum of consolidated (and combined, if applicable) PNC
Senior Debt and other Senior Debt as of each Calculation Date divided
by the consolidated (and combined, if applicable) EBITDA for Company
and its Subsidiaries for the four (4) fiscal quarters of Company and
its Subsidiaries immediately preceding the applicable Calculation Date
shall not be greater than 4.60 to 1.00 as of the Calculation Date
occurring on March 31, 2000, and thereafter until, but not including,
the Calculation Date occurring on June 30, 2000; 4.50 to 1.00 as of the
Calculation Date occurring on June 30, 2000, and thereafter until, but
not including, the Calculation Date occurring on September 30, 2000;
and 3.50 to 1.00 as of the Calculation Date occurring on September 30,
2000, and as of all Calculation Dates thereafter."
1.5 By deleting the reference in Section 5.1(k) each
reference to "September 30, 1999" and substituting therefor
"June 30, 2000" in each case.
1.6 By adding the following new Section 5.2(k):
"(k) EARN-OUT PAYMENTS. Except for the $1,000,000.00 Earn-Out
payment paid to Xx. Xxxxxx on February 29, 2000, and financed (i.e.,
not an Unfinanced Earn-Out) with the proceeds of the recent equity
offering by Company, Company shall not, and shall not permit any of its
Subsidiaries to, make any payment with respect to any Earn-Out at any
time (i) the Funded Debt to Modified EBITDA ratio of Company and its
Subsidiaries, as such ratio is more particularly described in Section
5.1(h)(i) of this Agreement, is greater than or equal to 5.00 to 1.00
as of the Calculation Date immediately preceding the date any such
Earn-Outs are due and payable or (ii) the Fixed Charge Coverage Ratio
of Company and its Subsidiaries, as such ratio is more particularly
described in Section 5.1(h)(ii) of this Agreement, is less than or
equal to 1.10 to 1.00 as of the Calculation Date immediately preceding
the date any such Earn-Outs are due and payable."
SECTION 2. WAIVER OF CERTAIN PROVISIONS. (a) Effective as of
the Effective Date, GE Capital hereby grants a waiver of Company's and its
Subsidiaries' non-compliance with:
(i) the covenants contained in Section 5.1(b)(ii) of the Purchase
Agreement and Section 13.2 of the Warrant and of the Events of Default that
would otherwise result from a violation of those sections solely for the Fiscal
Year ended December 31, 2000 and to the extent Company shall deliver to GE
Capital such financial
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documents as soon as practicable after the filing with SEC of its Form 10-K
Annual Report for the Fiscal Year ended December 31, 1999;
(ii) the financial covenants contained in the Sections 5.1(h)(i) and
(ii) of the Purchase Agreement and of the Events of Default that would otherwise
result from a violation of those sections, solely for the period from November
10, 1999 to March 30, 2000; and
(iii) the covenants contained in Section 5.1(k) of the Purchase
Agreement and of the Events of Default that would otherwise result from a
violation of that section, solely for the period from September 30, 1999, to
March 30, 2000.
(b) Effective as of the Effective Date, GE Capital hereby waives,
solely in respect of the issuance by Company of the Stock as set forth on
Schedule A hereto, of the applicability of Articles IV and XVII of the Warrant
and any other similar anti-dilution provisions in the Transaction Documents.
(c) Company agrees that it will, and will cause its Subsidiaries to,
hereafter comply fully with the provisions waived pursuant to this Section 2, as
amended, and all other provisions of the Purchase Agreement and the other
Transaction Documents, which remain in full force and effect
SECTION 3. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT.
Except as otherwise expressly provided herein, this Amendment shall be effective
as of March 31, 2000 so long as each of the following conditions shall have been
satisfied or provided for in a manner satisfactory to GE Capital or waived by GE
Capital (such date is referred to herein as the "Effective Date"):
(a) This Amendment shall have been fully executed and delivered by each
of the parties hereto.
(b) Each of the Subsidiaries of Company party to the Guaranty shall
have executed and delivered the consent included in the signature pages hereto.
(c) The Fifth Amendment to Loan Agreement and Amendment to Note among
Company, each of its Subsidiaries listed therein and PNC Bank, National
Association ("PNC Bank"), shall have been executed and delivered by each of the
parties thereto (the "Fifth Amendment") in form and substance satisfactory to GE
Capital.
(d) The Guaranty Agreement (as defined in the Fifth Amendment) shall
have been executed and delivered by each of Xxxxxxx X. Xxxxxxxx, Xxxxxx X.
Xxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx, III (each an "Individual
Guarantor") in form and substance satisfactory to GE Capital.
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(e) Each Individual Guarantor shall have executed and delivered the
consent included in the signature pages hereto.
(f) Each of Xxxxx X. Xxxxxxxx, Xxxxxx Xxxx, Xxxxxx X. Xxxxxx, Xxxxxxx
X. Xxxxx and Xxxxxxx X. Xxxxxx shall have executed and delivered an Agreement in
form and substance satisfactory to GE Capital.
(g) Each of Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. and Xxxxx Xxxxxxx
Strategic Growth Fund, L.P. shall have executed and delivered a Waiver, Consent
and Covenant in form and substance satisfactory to GE Capital.
(h) Company shall have obtained, and delivered to GE Capital a copy of,
each consent required in connection with this Amendment and the Fifth Amendment.
SECTION 4. EFFECT ON PURCHASE AGREEMENT.
(a) On and after the Effective Date, each reference in the Purchase
Agreement to "this Agreement", "herein", "hereof", "hereunder" or words of
similar import, shall mean and be a reference to the Purchase Agreement as
amended hereby.
(b) Except as specifically amended above in connection herewith, the
Purchase Agreement shall remain in full force and effect and is hereby ratified
and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of GE Capital under any of the Transaction Documents or
constitute a waiver of any provision of any of the Transaction Documents.
SECTION 5. GOVERNING LAW. THIS AMENDMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. SECTION TITLES. Section titles contained in this Amendment are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
SECTION 7. COUNTERPARTS. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
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IN WITNESS WHEREOF, this Amendment has been duly executed as
of the date first written above.
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxx Xxxxxxxxxx
---------------------------------
Duly Authorized signatory
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CONSENT OF THE GUARANTORS
The Subsidiaries of Company hereby (i) acknowledge receipt of
a copy of this Amendment and (ii) agree that the terms and provisions thereof
shall not affect in any way the obligations and liabilities of such Subsidiaries
under the Guaranty or any of the other Transaction Documents, all of which
obligations and liabilities shall remain in full force and effect and each of
which are hereby reaffirmed.
AMERICAN HOME DEVELOPERS CO., INC., a
California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
FIVE STAR BUILDERS, INC., a California
corporation, successor in interest to
American Home Remodeling
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
KEY HOME CREDIT, INC., a Delaware
corporation
By: /s/ Leigh Xxx Xxxxxx
---------------------------------
Leigh Xxx Xxxxxx, President
KEY HOME MORTGAGE, INC., a Delaware
corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
XXXXXXXX SIDING AND WINDOW, INC., a North
Dakota business corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
PRIMAX WINDOW CO., a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
PRECISION WINDOW MFG., INC., a Missouri
corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
ROLOX, INC. a Kansas corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
TD WINDOWS, INC. a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMAL LINE WINDOWS, INC. a North Dakota
corporation, formerly known as Ice Inc.,
successor in interest to Blizzard
Enterprises, Inc. and Thermal Line Windows,
LLP
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMOVIEW OF MISSOURI, INC., a Missouri
corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-TILT WINDOW COMPANY, a Delaware
corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
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XXXXXX CONSTRUCTION, INC., a Missouri
corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-SHIELD OF AMERICA (ARIZONA), INC.,
an Arizona corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.,
a Michigan corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-SHIELD COMPANY, LLC, an Illinois
limited liability company
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, Manager and
President
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC, a
Wisconsin limited liability company
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, Manager and
President
THERMOVIEW ADVERTISING GROUP, INC., a
Delaware corporation
By:
---------------------------------
Xxxxxxxx X. Xxxxxxx, Secretary
PNC BANK, NATIONAL ASSOCIATION, a national banking association
By:
----------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
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CONSENT OF INDIVIDUAL GUARANTORS
Notwithstanding the provisions of that certain Subordination and
Intercreditor Agreement, dated July 8, 1999, among PNC Bank, Company and GE
Capital, if any amounts have become payable or have been paid by any Individual
Guarantor under the Guaranty Agreement, each Individual Guarantor agrees that
the rights of such Individual Guarantor, in respect of such monies, to seek to
enforce repayment, obtain the benefit of any security or exercise any other
rights or legal remedies of any kind which may accrue to such Individual
Guarantor against the Company or any of its Subsidiaries, whether by way of
subrogation, offset, counterclaim or otherwise, in respect of the amount so
payable or so paid (or in respect of any monies for the time being due to such
Guarantor from Company or any of its Subsidiaries) shall be pari passu with the
rights of GE Capital in respect of the Obligations if and for so long as any
Obligations shall be outstanding.
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx, III
---------------------------------
Xxxxxxx X. Xxxxxxx, III
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